
Cross-border banking needs cross-border recapitalisation mechanisms. Each mechanism, however, suffers from the financial trilemma, which is that cross-border banking, national financial autonomy and financial stability are incompatible. In this paper, we study the efficiency of different burden-sharing agreements for the recapitalisation of the 30 largest banks in Europe. We consider bank bailouts for these banks in a simulation framework with stochastic country-specific bailout benefits. Among the burden sharing rules, we find that the majority and qualified-majority voting rules come close to the efficiency of a bailout mechanism with a supranational authority. Even a unanimous voting rule works better than home-country bailouts, which are very inefficient. If we assume additional systemic risk benefits, the efficiency of burden sharing rules comes close to the supranational solution.
G28, SDG 16 - Peace, Wirkungsanalyse, Financial Stability, Public Good, F33, Bankgeschäft, International Monetary Arrangements, ddc:330, Finanzkrise, SDG 10 - Reduced Inequalities, Justice and Strong Institutions, Internationale Bank, Financial Stability, Public Good, International Monetary Arrangements, International, International, H41, Schuldenübernahme, Europa, Refinanzierung, jel: jel:H41, jel: jel:G28, jel: jel:F33
G28, SDG 16 - Peace, Wirkungsanalyse, Financial Stability, Public Good, F33, Bankgeschäft, International Monetary Arrangements, ddc:330, Finanzkrise, SDG 10 - Reduced Inequalities, Justice and Strong Institutions, Internationale Bank, Financial Stability, Public Good, International Monetary Arrangements, International, International, H41, Schuldenübernahme, Europa, Refinanzierung, jel: jel:H41, jel: jel:G28, jel: jel:F33
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